"The Economist" House Prices Graphs

oceanclub

Lots of food for thought here:

http://media.economist.com/businessfinance/displaystory.cfm?story_id=14438245

One thing that strikes me is, for the "prices against average income" graph, how Irish house prices were crazy even compared to other bubbles around the world. For example, even now, after substantial price drops, the difference between house prices and the average income is _worse_ than the UK at its peak.

And the US "bubble" in comparison is barely a blip.

P.

gurramok

Yeh, even in densely populated Florida you could of bought a large 4 bed house in Orlando with a swimming pool out the back for $200k at their peak. Convert it to euro (always <€200k depending on exchange rate) and one would see how mad it went here.

That graph shows how much out of kilter Ireland was and still is, the worst area in the Western world to buy property.

ZYX

oceanclub wrote: »

Lots of food for thought here:


One thing that strikes me is, for the "prices against average income" graph, how Irish house prices were crazy even compared to other bubbles around the world. For example, even now, after substantial prices drops, the different between house prices and the average income is _worse_ than the UK at its peak.

And the US "bubble" in comparison is barely a blip.

P.

Are we looking at different graphs. When I look at "prices against average income" and compare Ireland to UK between 1994 and 2008 (ie last 15 years) then UK house prices are well ahead of Irish prices. They are the same until 2001 and then UK prices take off. I assume the graph is wrong as based on it Irish houses are probably undervalued compared to average wages over last 10 years. Indeed based on this graph over last 10 years Irish prices are now better value than USA prices as well

ZYX

I have been looking at this again. If you look at Property prices compared to average wages from 1992 to 2008 (longest period you can check)
then property prices in Ireland are apparently better value than Australia, Belgium, Denmark, Sweeden, New Zealand and Britain. (the same is also true if you begin in 1996 or 1997, the start of the "boom")

Makes interesting reading. Obviously the data is 12 months out of date but prices have fallen a lot more than wages have fallen so improves the comparitive worth of Irish property.

gurramok

Would you rather buy a house here or in Australia?

You know what many would answer as Australia's houses offer better value for money.

Overall, Its a funny reading when comparing Irelands case to high density nations!

20goto10

oceanclub wrote: »

Lots of food for thought here:

http://media.economist.com/businessfinance/displaystory.cfm?story_id=14438245

One thing that strikes me is, for the "prices against average income" graph, how Irish house prices were crazy even compared to other bubbles around the world. For example, even now, after substantial price drops, the difference between house prices and the average income is _worse_ than the UK at its peak.

And the US "bubble" in comparison is barely a blip.

P.

Just a point, we don't have any official house price figures in Ireland.

ZYX

20goto10 wrote: »

Just a point, we don't have any official house price figures in Ireland.

The figures come from the ESRI. So the true cost of Irelands properties on the graph are probably a lot less.

asdasd

then property prices in Ireland are apparently better value than Australia, Belgium, Denmark, Sweeden, New Zealand and Britain.

Because Irish wages increases at a higher rate than the rest during that time. Britain does look like it is massively over-valued even now, although I know they have no real overhang of property.

The ratio of propoerty prices to income could stay the same even if property falls now, because income is in decline. The other ratio - the real property price will continue to fall. It seems there is 40% yet to go,if we dont even overshoot.

gally74

this graph is totally flaweyed,

everone knows where ireland was back in 1997, coming out fo 30 years of ups and down,

drop the start date to Q1 2000 and it looks more realaistic,

gally74

in fact drop it back to 2000 and add in south africa,

now thats a bubble

Diarmuid

gally74 wrote: »

this graph is totally flaweyed,

Flawed eh? Are the figures wrong? Otherwise the graph is not flawed. It's a presentation of data points .That's all.

gally74 wrote: »

everone knows where ireland was back in 1997, coming out fo 30 years of ups and down,

Care to elaborate on this? ups and down in what? house prices or salaries?

This is why you compare the house prices to income. If the economy is in the toilet then incomes and house prices should be equally depressed. (likewise in a boom)

gdael

gally74 wrote: »

this graph is totally flaweyed,

everone knows where ireland was back in 1997, coming out fo 30 years of ups and down,

drop the start date to Q1 2000 and it looks more realaistic,

I cant make sense out of that graph at all. I call Bullsh1t on it.

Id love to see a proper one though.

asdasd

What is,exactly, difficult about the graph? Well, graph(s).

asdasd

Belgium seems crazy. Utter madness. Still booming.

Diarmuid

gdael wrote: »

I cant make sense out of that graph at all. I call Bullsh1t on it.

What a great attitude you've got there.

ZYX

Diarmuid wrote: »

This is why you compare the house prices to income. If the economy is in the toilet then incomes and house prices should be equally depressed. (likewise in a boom)

It would be even better to compare prices to net income. Irish income tax rates have dropped by such a huge amount in last 20 years.